Born in 1966, Hong Kong-native Victor Koo flew to the US for his education, graduating first from University of California at Berkeley, followed by an MBA from Stanford Business School. In 1999, after working five years at a venture capital company in Beijing, he became the CFO of Chinese search engine company Sohu. He stayed until 2005, eventually assuming the role of president.
Licensed to thrill
In 2006, Koo launched his own venture, Youku, an online video site. Unlike YouTube, which focuses on user-generated content, Youku tilts more towards licensed media, mostly from China, Hong Kong and Taiwan. By showing television shows a day after they are first broadcast, Koo created something akin to an online TV channel. Youku users can still post their own videos, and receive a cash reward if they prove popular.
The site is acquiring some high profile content. This time last year, it worked with CCTV to screen an online version of its annual Lunar New Year Gala, and it later bought the rights from the state broadcaster to show matches from last summer’s World Cup. It has also started showing big Hollywood films, like Inception, on a pay-per-view basis (the Rmb5 fee is about the same price as a pirated DVD).
Path to profitability
Koo joined China’s billionaires club last December when Youku went public in New York. Rocketing 161% on the first day of trading, shares in the company had more than tripled in value by the next day’s close. Since its debut, the share price has come down somewhat.
Perhaps investors might be paying more attention to the fact that Youku is still to make a profit? Although the company attracts 260 million visitors a month, the vast majority watch its content for free. Koo thinks that the key to profitability is an increase in advertising revenues, and he has scope to boost sales. Youku currently shows just one minute of advertising per hour, compared to the 12 minutes shown by standard Chinese television stations.
So Koo remains confident that his company is on the road to profitability. But until he goes into the black he’s going to have his work cut out to prove he can make money out of running an online video site. On the positive side, his rival Tudou has broken even, which suggests it’s possible.
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